China, a country rich in coal, but with few petroleum or gas resources, might scrap efforts to produce petroleum by liquefying coal, an official with the country's top economic planning agency has said.

The possibility of such a move was raised after an evaluation of the nation's limited energy resources and environment, a deputy director of the industry department of the National Development and Reform Commission (NDRC) told a seminar on the development of China's ethanol industry. The event took place in Beijing on Saturday.

"Liquefied coal projects consume a lot of energy, though the successful industrialization of liquefied coal could help reduce the country's dependence on petroleum," said the official, who declined to be named.

The government said earlier that it would invest more in developing alternative energy resources, including biomass fuel and liquefied coal, as substitutes to petroleum during the 11th Five-Year Plan (2006-10) period, amid concerns over the country's growing dependence on petroleum.

China imported about 163 million tons of oil last year, driving the country's reliance on imported oil up 4.1 percentage points from a year earlier to 47 percent, official statistics show.

The country is also confronting huge demand for capital and the increased consumption of water and coal associated with the production of liquefied coal, the official said.

He said the authorities had launched the coal-liquefying projects without first carrying out any trial runs, and the technologies involved were not yet sophisticated enough.

However, the country will continue to search for substitutes to petroleum.

The State Council decided at a recent meeting that the government would not approve new grain-based ethanol projects in order to cut grain consumption for industrial use.

China Daily-Xinhua

(China Daily 06/11/2007 page3)